When a Good Strategy Is Losing Money - Part 2


Master Trader
Apr 17, 2013
“When I was 20 to 25 years younger, every move in the markets would make me excited. By the mid-90s, I got my emotions under control. I learned to focus on eliminating risk on the front end, so that I would have fewer problems on the back end.” – David J. Merkel

Mr. Liam* was attracted to a trading strategy software as it was being pitched. The 2-year historical results were amazing, as shown by the vendor of the software. The results showed a historical hit rate of 70%, but the software was very expensive. In order to purchase the software, Mr. Liam had to pay in 4 installments. After that, he was able to get the software.

However, Liam lost money with the strategy, and he got the vendor arrested.

Because Liam was a good reader – reading many trading article and magazines – he discovered that there were successful traders. Since he was inspired by testimonies from super traders, he continued working to improve his knowledge.

When he attained some level of competence, he put the strategy to test again and saw that the strategy was wonderful. He realized that he himself, not that strategy, was responsible for his loss. He felt sorry for the strategy vendor, and as a result of that, he visited the vendor and tendered his heartfelt apology. He even gave the vendor a cash gift of $1000.

A great strategy can’t work for a suicide trader.

The Power of Choice
Anyone who says she/he can never lose is an accomplished fabricator. Anyone who says their strategy doesn’t lose is also a distinguished fabricator. Losses are a blessing in disguise because they’re the secrets that help us become better traders. When you lose money with a good strategy, after being faithful to it, it’s up to you to decide whether to quit or continue.

There was a legendary trader who made and lost fortunes in the markets. We got much to learn from such a great trader, so that we know what’s behind his success and imitate him. We also want to know the cause of his failure so that we can avoid that in our trading. The truth about trading is timeless and it will forever be. Humans drive the markets, and as such, various human emotions are reflected in price actions. When things go wrong, we want to make sure that the effects on our portfolios are minimal.

Successful traders lost in the past. Yet, they continued until they reached a stage where they start making money effortlessly. When they were losing, some people tried to discourage them, thinking they’d their best interest in heart. If you allowed yourself to be discouraged because of the current fleeting losing streak, in future, you’ll only be green with envy when you hear how much successful traders are being paid.

Super stars, celebrities, politicians, athletes, etc.; have always faced ignominious defeats now and then in their careers. Greatest role models accepted defeats in the past, but they moved on. Greatest role models accept defeats today, and they move on. Their transitory failures were the secrets of the enviable breakthroughs they enjoyed later.

Check the stories of very great people in various walks of life, past and present. You’ll understand what I’m talking about.

Super traders today refused to be discouraged when things were tough, when their friends and folks were asking them to try another “safe” ways to earn livelihood. The other “safe” alternatives that many members of the public prefer to trading are the major reason why more and more members of the public are getting poorer and poorer. Those who allowed themselves to be discouraged paid a heavy price for their short-sightedness.

The Inevitable Experiences
It’s easy to criticize others while we’re being blinded to our imperfection. Everyone thinks they’re right, until the markets prove them wrong. We’ll do ourselves great favor by focusing on our own weaknesses and working on them: instead of focusing on other people’s weaknesses.

All traders will experience negativity. You can continue to experience negativity, irrespective of what you do, until you start asking what’s really wrong with your life. At this stage, you’ll doubt your possibility of becoming a profitable market speculator. Yes, all traders experience negativity, and sadly, that’s the stage where most others quit. No wonder then that few people can share testimonies to the possibility of everlasting success in the markets.

Very few traders move beyond the stage where they lose, no matter what they do. Indeed, very few people will rise up and continuing struggling again, after they’ve been floored by the markets. You must master yourself before you master the markets. Bad trading results are an evidence of personality flaws in you and good trading results are evidence that you’ve controlled those flaws.

The few people who rise up to struggle again will inevitably reach a stage when they start making money effortlessly and consistently. These are the people that the public call “market wizards,” “super traders,” “pros,” “expert speculators,” “gurus,” “witches,” “mad geniuses,” etc. The public think something is special about them, but these people know that there’s nothing special about them. They’re consistently profitable because of their many years of experiences, plus their winning speculation principles have been practiced again and again until they become their second nature. You think they’re smarter, more brilliant, more fortunate, more intelligent, and more innovative. Nevertheless, they think they’re not better than you. What makes the difference is that they decided to continue fighting for success at the stage that most others quit.

We’re given the power of choice to use for future glory or future regret. Even if we’ve challenges in the markets, why can’t we seek help from professional traders and coaches? If you got a persistent toothache, you go to a dentist. Then why not seek help from a trading professional when you’ve a challenge?

The quote below ends this article:

“You also need to be able to trade a setup even when it is profitable. By that I mean that you need to stick to it throughout all the ups and downs. After all, it takes several tries with some setups for the trade to work. Until it does, you must be able to continue trading with confidence.” – Ruediger Born

*His name has been changed.